Proxy Season Prep: ICCR Resolutions and Voting Guide Shed Light on Shareholder Hot Buttons
To get your company ready for proxy season, we’re publishing a series of articles with practical guidance and tips. This week, we’re looking at the Interfaith Center on Corporate Responsibility and its recently released Proxy Resolutions & Voting Guide to shed light on the hot button issues for the 2023 season.
One of the most interesting parts of any proxy season is shareholder proposal activity. And if you want a snapshot of what that’s going to look like this year, look no further than the Interfaith Center of Corporate Responsibility (ICCR) and its much-anticipated 2023 Proxy Resolutions & Voting Guide, released on February 16th.
ICCR is a coalition of shareholder activists from the faith-based community, labor unions, pension funds, asset managers, foundations, and others. Every year in advance of proxy season, the group releases its annual guide, featuring a lengthy list of new and ongoing resolutions and their company targets. The proposals filed by ICCR members typically account for a significant majority of all environmental and social issue resolutions filed by shareholders during a season as well as a meaningful percentage of shareholder corporate governance resolutions. So far this proxy season, ICCR members have filed 376 resolutions, down from 436 resolutions in 2022, but still significantly higher than the 244 filed in 2021. Here’s what we took away from our review of this year’s guide.
Climate Change, DEI, and Worker Rights Are Top of Mind
The three most popular issue areas are Climate Change (91 resolutions), Diversity and Racial Justice (85 resolutions), and Human Rights and Worker Rights (71 resolutions). These three areas account for almost 66% of all the proposals filed by ICCR members.
- Climate Change – The 91 climate change-related resolutions filed in 2023 cover a lot of ground. But the most frequently filed proposal type in this category asks companies to develop transition plans to reduce their GHG emissions and to annually report on their progress in achieving GHG emissions reduction goals. The activity in this area confirms that companies can expect the issue of climate change to remain front and center for ESG investors and activists for some time to come.
- Diversity and Racial Justice – The 85 Diversity and Racial Justice resolutions address multiple topics as well. However, two types of proposals account for more than half of the resolutions filed on this topic. The first set includes requests for target companies to conduct independent audits analyzing their adverse impacts on nonwhite stakeholders and communities of color. The second type asks for greater reporting of material corporate diversity, equity, and inclusion data.
- Human Rights and Worker Rights — The 71 Human Rights and Worker Rights resolutions submitted are the most diverse subset with almost 40 different types of asks showing up in this topic area. The most popular asks in this category of resolutions address the adoption of paid sick leave and freedom of association and collective bargaining.
Director Elections and Political Activity Are Emerging Concerns
The remaining two-thirds of ICCR resolutions not specific to climate, DEI, or worker rights span a variety of issues. ICCR members filed resolutions addressing Fair Director Elections at 29 different companies. These resolutions ask for shareholder approval for advance notice bylaw amendments that would make the process of submitting director nominees more burdensome or standing for board election more onerous.
Investors are also clearly interested in more political activity disclosure from companies. ICCR members filed 22 resolutions requesting targeted companies to provide disclosure of corporate lobbying expenditures. Other submitted resolutions falling under the corporate political disclosure umbrella specifically address Political Contributions Misalignment as well as greater disclosure of contributions.
The top issues for resolution activity provide invaluable insight into investors’ priorities – as well as where companies should be focusing their ESG and disclosure efforts going forward. Another valuable source of information is the number and nature of proposals that are withdrawn by proponents. February into March is a time of significant engagement and dialogue between shareholder proponents and the companies that receive their resolutions. What proposals are withdrawn can be a signal of what issues and resolutions are finding resonance with companies and a broader range of investors.
Need more guidance on how to navigate this proxy season?
Let’s talk. As a proxy advisor partner, Riveron can assist in preparing proxy statement materials, reviewing proxy statement ESG content and messaging, and responding to shareholder activists to help you address investors’ interests and deliver the right information in the right ways.
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